By Stuart Ritter, CFP®
T. Rowe Price Senior Financial Planner


If you’re like 28% of American parents, you find yourself losing sleep over the thought of saving for college. This is according to a recent survey we at T. Rowe Price conducted that aimed to understand the basic financial knowledge, attitudes, and behaviors of parents and their kids ages eight to 14.With all of the factors at play – how to save, when to start, how much to put away – it’s no surprise that parents just like you feel overwhelmed about college savings. Here are some of the most interesting parental college savings trends that T. Rowe Price’s survey uncovered, plus tips on how to avoid the most common pitfalls.


    • Understand the best type of accounts to use for college savings. According to T. Rowe Price’s survey, 44% of parents identified a regular savings account as one of the best ways to save for college, but only 34% identified a 529 account. Because 529 plans allow tax-free distributions toward qualified education expenses, this can mean more money to use towards college costs than saving in a taxable account. Plus, depending on where you live, your state may offer a state tax deduction for contributions to your plan.


    • Bring your kids into the conversation. T. Rowe Price’s survey found that kids are more confident they’ll attend college when their parents are already saving for and talking about it with them. Having college savings discussions with your kids is a great way to inspire them to achieve higher education, and to keep yourself accountable to stick with your savings plan. Don’t just assume that your kids know about your savings, either. Over one third of the children surveyed were not aware if their parents were saving for their education or not.


    • Understand the implications of financial aid and loans. Of the 88% of parents who do not expect to save enough money to pay for all of their kid’s college expenses, most expect to use scholarships and student loans for the remaining costs. If you are expecting to rely on loans for your children’s higher education expenses, keep in mind that borrowing money for college instead of saving in advance can significantly increase the out-of-pocket cost of college. So the more you save today, the better off you’ll be when your kids enroll.


    • Calm college savings anxieties with realistic goals. While over a quarter of moms and dads surveyed said that college costs keep them up at night, most of the parents losing sleep (64%) are currently saving for college. If you have apprehensions about saving for college, even if you’re already putting money away, remember that you don’t have to save for the entire cost. Pick a realistic goal, such as saving for one or two years’ worth of costs, and work towards achieving that milestone.

Whether you’re one of the 51% of parents who regularly set aside money for college, or you’re at the beginning of your college savings journey, by understanding the benefits of a 529 for college savings, having conversations with your kids, setting realistic goals, and knowing the importance of saving in advance, you’ll be starting on the right track to meet your college savings goals.

About the Author:


Stuart Ritter, CFP® is a senior financial planner at T. Rowe Price.  He is the father of three young kids and has been a 529 saver since before they were even born (he is a financial planner after all!).


Please note a 529 plan’s disclosure document includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Please consider before investing whether your or your beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s plan. Earnings on a distribution not used for qualified expenses may be subject to income taxes and a 10% federal penalty. The availability of tax or other benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions, or other factors, as applicable.